Microsoft has confirmed that it is no longer involved in the artificial intelligence data center project in Loughton, northeast of London. The partner was local startup Nscale, which is backed by chipmaker Nvidia. The deal was struck a year earlier: Microsoft planned to lease computing capacity at the site that former Prime Minister Keir Starmer called Britain's largest sovereign AI center.
A Microsoft representative said the decision concerns only one site and stressed the company's commitment to its partnership with Nscale. Nscale said it is not abandoning the Loughton project and is looking for alternative energy sources and other sites to expand in the country. It added that relations with Microsoft remain strong and long-term, and that the London grid problem does not affect other contracts.
British media reported that power grid operators had notified Nscale that access to electricity at the site would not be available until the next decade. Large data centers require major infrastructure investment, and this delays connection. U.K. Power Networks, which does not disclose data on specific connections, told AFP that many data centers can connect to the distribution network but are waiting for work on the national transmission network, which the operator does not own.
The Loughton deal was announced alongside multibillion-dollar investments by US tech giants during President Donald Trump's state visit to Britain. They were presented as a step toward turning the country into an AI superpower. However, some data center projects are stalling because of high electricity prices and long waits for grid connection.
Meanwhile, Nscale is preparing for an initial public offering (IPO - a company listing on a stock exchange and selling shares to investors) on the New York Stock Exchange. Reports say the startup is aiming for a valuation of up to 35 billion dollars. In its IPO filings, Nscale notes that a significant portion of contracted revenue is provided by a limited number of clients with large contracts - Microsoft and US-based Anthropic. According to a source familiar with the situation, Loughton's share of Microsoft's agreements with Nscale was small.
Earlier this year, ChatGPT creator OpenAI withdrew from a partnership with Nscale and Nvidia to build a British version of Stargate, a large-scale AI infrastructure initiative. According to British media, the reason was high energy costs and regulatory uncertainty.